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I would wager that most everyone who makes a living buying or selling steel tubular goods in this country has at one point or another typed “oil prices” into Google. I would further wager that if they had never done so previously, these aforementioned folks had looked into oil prices for the first time in 2015 as significant oil price drops have no doubt been addressed ad nauseam by their sales managers. The physics, economics, and politics behind fluctuating oil prices and their relative impact on economies will be covered in a two hundred part blog series to follow. The focus of this blog is to give you the basics between the main benchmark oils traded on the commodities market: West Texas Intermediate (WTI), Brent, and OPEC-Basket. There are about 161 oils traded in various commodity markets, but these three are the main benchmarks which set the pace for the rest of the world…they are the peloton of the oil market.

West Texas Intermediate (WTI)…this is the one which is probably most important to you…especially of you are a so-so honky-tonk band.

As the name implies, WTI is crude oil generally from the central and southern plains of the US. When you look up oil prices on most American investing sites, you will typically see the WTI price listed first. Often you will find that it’s the only type of crude listed. This is because WTI is what “hits home” the most for the majority of Americans. Generally speaking, when folks are discussing the current price of domestic oil, they are (whether they know it or not) referring to WTI. WTI has an API Gravity of 39.6 and a sulfur content of about .24% which makes it very easy to refine. Because it is so easy to refine, WTI has historically traded at a slight premium over Brent crude and at a larger premium over OPEC crude. Certain economic factors have caused WTI to beg a lower price than Brent crude over the last few years, but WTI still serves as a very relevant benchmark for the global oil market.

Brent Blend…cleverly named after the Brent Oilfield which is located under a large hunk of cold water between Scotland and Norway.

Brent Blend is a basket of oils collected from fields throughout the North Sea. With an API Gravity of 38.3 and a sulfur content of .37%. Brent is considered an easily refinable (due to its API Gravity) “sweet crude” (meaning it doesn’t have much sulfur), so traditionally it has been priced at only a slight discount to WTI. In recent years Brent has overtaken WTI as THE main international benchmark for oil prices due to both its refinability and easy access to global markets.

OPEC…Organization of Petroleum-Exporting Countries…there’s nothing really funny about these guys.

When referencing OPEC or OPEC Basket crude, we are typically talking about oils coming from Algeria, Saudi Arabia, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, UAE, and Venezuela. In short, OPEC operates as a cartel controlling roughly 40% of the world’s crude oil production according to the US Department of Energy. In general OPEC oils are not as easily refinable as Brent or WTI crude so they are traded at a discount. Where the OPEC Basket makes its mark on the global oil market is on its ability quickly adjust a lion’s share of the world’s oil production. To put it in American-ease, if WTI and Brent run a west-coast style offence, OPEC would be 76′ Steelers.